Why Australia's most iconic surf shop could close its doors forever: 'Need to decide its future'

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The future of one of Australia's most iconic retailers Surf Dive 'n Ski is uncertain after its parent company became the target of a celebrity-backed takeover bid. 

New York-based Authentic Brands Group (ABG), which owns other big-names such as Reebok, Forever21 and Juicy Couture, announced this week it had made a $1.88billion offer to buy Boardriders, the parent company of iconic Aussie surf brands including Quiksilver and Billabong.

The sale will also include Surf Dive 'n Ski's 80 retail stores across Australia and its online business.

ABG, which is run by Canadian billionaire Jamie Salter and whose major shareholders include US basketball star Shaquille O'Neal and global footballing icon David Beckham, has been on a huge spending spree of late, buying up British brand Ted Baker last year.

The future of Surf Drive 'n' Ski's 80 stores across Australia are uncertain 

The lifestyle retail chain sells a range of outdoor action sports clothing as well as more fashionable surf items

Last month, it was even rumoured to be considering a bid for Wellington boot brand Hunter.  

Now ABG's proposed acquisition of Boardriders will mean it could soon own some of the most iconic global brands in surf and skate - including Quiksilver, Billabong, Roxy, DC Shoes, RVCA, Element, VonZipper and Honolua - in addition to Australia's own Surf Dive 'n Ski.

But analysts have warned that the future is uncertain for the leading lifestyle retail chain under its proposed new owners.  

Brian Walker, founder and CEO of the Retail Doctor group, said it was a 'solid deal' which played into ABG's strategy of building a 'house of brands' but warned that the new owners would likely seek to overhaul its offering. 

'They own some pretty successful brands already - Nautica, Reebok, Forever21. What does this deal give them? It gives them reach, scale and a multitude of brands so they become a very powerful house of brands,' Mr Walker told Daily Mail Australia.

Shaquille O'Neal (left) is a major shareholder in Authentic Brands Group which was founded by Canadian billionaire Jamie Salter (right). ABG has made a deal to buy Boardriders - parent company of Quiksilver and Billabong - and Surf Dive 'n' Ski's 80 stores 

'Ultimately, these machines have to continue to grow to achieve efficiency.  They are sweeping up a range of brands on a global scale. 

'From a consumer point of view you'd like to think they will see an even sharper delineation between the brands. Surf Dive 'n Ski is one.  They really need to decide the future of Surf Dive 'n Ski. 

Mr Walker said SDS found itself in the middle of a conundrum. 

'In Australia they are a little bit too big to be small and too small to be big - so they are caught in that middle ground right now,' he said.

'I would imagine they are looking at it in terms of brand reference, sharpening up the point of difference. I'm not exactly sure who their core audience is. I think some of the other brands in the portfolio have a much clearer customer value proposition.

'That said, it's a great, iconic brand name and has been around for a long time.

'Does it have potential to expand overseas? Does it have potential to be part of their brand livery? What's its value proposition? These are the questions ABG will be asking.'

Boardriders, which is more than 50 years old, has operations in the Americas, Europe, Australia and Asia.

Surf Dive 'n' Ski may undergo a 'refresh' under its new owners, according to one retail expert

Its portfolio currently generates $2.9billion in retail sales each year through a network of over 500 retail stores, 7,000 wholesale accounts and websites in 35 countries.

But Boardriders cut almost 200 jobs late last year as part of a cost-cutting drive by the company's current owners, US private equity firm Oaktree Capital Management. 

The job losses, which happened weeks before Christmas, included around 70 staff members based at Boardriders' Burleigh Heads office on the Gold Coast.

Mr Walker said that ABG would want to ensure Boardriders' established surf brands remain relevant to a younger market. 

'Some of these brands are going to need large-scale refreshes and overhauls in time to come,' he said.

'Both in terms of becoming an omnipresent business and being relevant to a generational change with Millennials and Gen Z.

'What I suspect will happen with the surf brands is they will have shorter, deeper life cycles than their predecessors. Part of this will be creating ongoing, new brands so if we think about Roxy, RVCA, Element, - part of the strategy will be to continue to create these fresh new brands and keep them hot.'

Mr Walker questioned if older, legacy brands would be better off separated away from the store given their place in the Aussie market.

'I wonder, ultimately, if the Quiksilvers and Billabongs are reaching a form of maturity and these emerging and new brands will be pivotal as part of their strategy,' he said.

'They may look at this and go "you know what, Roxy is a brand that really has relevance. Yes it houses within the parent brand but it's a great standalone brand and we can really build that out".

'Quiksilver and Billabong will always have a place but I suspect quite frankly that they are going to serve an older customer who grew up with them.'

Billabong's fortunes have been far from certain over the years. 

Its share price crashed in 2012, forcing the closures of 150 stores and leading to the loss of 400 jobs.

Other celebrity backers of ABG include global footballing icon David Beckham (pictured centre). ABG founder Jamie Salter is on the right 

The company lost a huge $860million in 2013 before recovering to make a small profit in 2015.

It was eventually bought by Boardriders for $198 million in early 2018. 

Meanwhile, Quiksilver had experienced problems of its own, having emerged from bankruptcy in 2016.

Another retail source said Boardriders needed the deal because of its $US740million debt load, which ABG will repay once they buy the company. 

'The strategy comes first, and from there they will implement the right business model. It will be a BAU [business as usual] until they figure it out. These guys are pros. They are the natural owners of this business,' the source told The Australian Financial Review. 

Daily Mail Australia approached Boardriders for comment on the future of SDS.  

ABG claims a turnover of around $AU36.6 billion from its more than 40 brands via over 10,000 direct sales outlets and some 380,000 retailers throughout the world. 

Its founder and CEO, Jamie Salter, began his career in sporting goods by co-founding snowboard manufacturer Ride Inc. in the early 1990s.

He started ABG in 2010 and the company began acquiring the rights to brand names as well as the rights to dead celebrities including Marilyn Monroe, Michael Jackson, Muhammad Ali and Elvis Presley.

Billabong could now be owned by US firm Authentic Brand 

Within six years, he had grown it into a $US1.5 billion company.

Big-name shareholders include Shaquille O'Neal and David Beckham, both of whom are regularly pictured with Mr Salter. 

Arne Arens, CEO of Boardriders, signalled that the parent company will expand into the lucrative athleisure market.

'Under Authentic’s ownership, Boardriders will be uniquely positioned to expand the reach of our iconic brands to millions of consumers, capture market share in our core categories and grow white spaces, including premium athleisure, training and lifestyle,' she said. 

Jamie Salter, Founder, Chairman and CEO of Authentic, said:  'As an early believer in the global and commercial appeal of action sports, this brings me back to the roots of my early career.

'Along with the great brands and impressive global reach that will come with this acquisition, we see Boardriders’ potential as a thriving online marketplace under Authentic’s ownership. 

'With Boardriders’ proven retail playbook, we also see tremendous opportunities to accelerate the expansion of its shop-in-shops, branded retail stores, wholesale and e-commerce worldwide.'

The takeover bid, which is expected to go through towards the end of the year, is still subject to the approval of certain Boardriders representatives.